ED's Blog by The Godfather of Biodiesel in the Northeast

Air conditioning is the new big thing globally. The huge increase in demand and the pace at which it is occuring, particularly in countries that are relatively rural with less reliable electricity, is bringing air conditioning to the forefront as a huge environmental concern that was essentially overlooked historically.

We tend to think of air conditioning as a sort of add on luxury item, but clearly the demand growth indicates it is becoming more and more of a standard item globally. We need to seriously look at how we approach making it a less energy intensive and environmentally destructive product.

The issue with air conditioning, in terms of environmental impact, that is of particular concern (in addition to the huge energy usage and carbon emissions) is that older air conditioners are dependent on hydroflourocarbons (HFCs). HFCs are used as refrigerants and have hundreds of thousands of the heat trapping power of CO2. HFCs account for only 1-2% of warming currently, however, given their use in air conditioning and the increasing demand, projections put HFC contributions to emissions at up to 19% should their use continue unchecked.

So what do we do?

As we discussed before, the Montreal Protocols were the critical factor in the global community moving away from CFCs, and there has been a demonstable effect on the ozone as a result of action on those protocols. The protocols replaced CFCs with HFCs - now we move into the second phase of the process, where HFCs also get phased out.

I wrote an article for the August issue of Oil & Energy Magazine that details what the increasing AC demand looks like and goes into more of the process involved with the Kigali Amendment, Montreal Protocols, and the effect taking those actions is expected to have on the pace of Climate Change. You can read the full article here: Bringing Air Conditioning to Developing Countries

"Bill Gates has said that to solve our energy problems, someday we need to do what photosynthesis does, and that someday we might be able to do it even more efficiently than plants...That someday has arrived" - David Nocera, Harvard University

The "Bionic Leaf" (version 2.0) is a cutting edge hybrid approach to artificial photosynthesis that can convert solar energy to biomass at an efficiency rate of about 10% using pure CO2 and 3-4% using air, which believe it or not, far surpasses "real" photosynthesis. ("Real" or plant based photosynthesis generates about 1% return of carbohydrates from solar energy in efficient plants)

Generally speaking, artificial photosynthesis seeks to use solar energy, water, and carbon dioxide to produce energy dense liquid fuels in the same way that plants use the same elements to produce energy. The process has the potential to be carbon neutral, which is a huge upside, environmentally speaking. Pretty exciting stuff!

On Monday (August 3rd), President Obama unveiled his latest initiative to combat Climate Change, in the form of new proposed regulations on power plant emissions. The plan would reduce emissions from power plants to 32% below the 2005 benchmark levels by 2030 (by 870 megatons). This is the first time federal limits on this type of emissions would be enacted, and the EPA’s Clean Air Act is cited by the administration as allowing for said federal limits.

From the EPA press release on the new regulations:

“By 2030, the plan will cut carbon pollution from the power sector by nearly a third and additional reductions will come from pollutants that can create dangerous soot and smog, translating to significant health benefits for the American people. By 2030, emissions of sulfur dioxide from power plants will be 90 percent lower and emissions ofnitrogen oxideswill be 72 percent lower, compared to 2005 levels”

The estimated cost of the program is $8.4 billion annually, according to an EPA spokesperson, and the benefits are projected to be between $34 and $54 billion per year, including health benefits.

Under the rule, individual states must draft and adopt compliance plans by 2018 and meet initial projected targets by 2022.

Industry groups and officials are obviously not thrilled with the new rule, citing potential billions in infrastructure costs associated with moving away from coal power generation. Additionally, the plan includes a target of the US generating 28% of its power via “renewable” sources versus the current 13% level – this does not include natural gas, and further complicates how exactly states and utilities can make changes to hit these targets.

The earlier draft in 2014 included more assumptions that the move would be from coal to natural gas (which generates around a 50% reduction in carbon emissions), this ruling in that regard is even more cumbersome, with the additional costs and difficulty of going from coal to wind, solar, or nuclear – when it's already expensive to go from coal to natural gas.

Critics are citing this as another example of the “War on Coal” and Legislators from coal heavy states cite job and revenue hits they believe the new rule will cause. Some Attorneys General have already signaled they are filing suit, arguing the rules go far beyond the Clean Air Acts provisions, and some states have declared they will refuse to follow the guidelines. Of note however, is that recently the Supreme Court ruled in favor of the EPA re: the Clean Air Act and methane regulations, and it may very well do so again on this case.

The Obama Administration, EPA and DOT are set to unveil new proposed regulations today aimed at reducing fuel use and curbing emissions in trucks as part of the push for regulations aimed at stemming Climate Change.

The Climate Change proposals, in addition to the new trucking regulations, will include new regulations on airplanes, power plant emissions reductions, and more restrictions on methane emissions from the oil and gas industry (for a quick refresher there: Methane & Consumers giving Natural Gas Headaches ).

The new trucking regulation proposal will be open to comment, and finalized as a rule next year.

Under the proposal as it currently stands, truck manufacturers will be required to increase fuel efficiency by 1/3. This would apply to all 2019 and later model year trucks. The EPA is ballparking the required changes to those trucks to cost approximately $12 thousand dollars per vehicle, but they argue that the amount of money from fuel savings would offset that cost in 18-24 months.

The regulations regarding DEF and SCR Technology effective in 2010 have already made trucking emissions cleaner than some of its gasoline counterparts (for more on that check out:This Ain't Your Grandpa's Diesel Truck ). This additional measure is intended to complete the cycle so to speak, and deal with the perceived lack of fuel efficiency of trucks, especially 18 wheelers, and other heavy-duty and/or heavy-use vehicles like garbage trucks, delivery vehicles, and even heavy-duty pickup trucks.

According to the New York Times, the manufacturing industry is split essentially down the middle on the issue, with half concerned about the cost, logistics, and potential safety impacts. The other half seem to be on board and believe the plan is feasible by 2019 model year roll out.

How will the 2014 Midterm Election results cause a shift in the Energy Agenda?

Keystone XL:

Prior to the midterm elections, Congress sent numerous bills to the Senate to push approval of the Keystone XL pipeline, none of which were brought to the Senate floor. That all likely changes with a Republican Majority Leader. Most likely we will see a vote happen on Keystone, and with Republicans controlling the Senate there are solidly enough votes to pass. Whether the President will sign it or not is up for debate, but in late October during a visit to Canada, Secretary of State John Kerry said he would like to "see a decision, sooner rather than later", maybe signaling that the President won't veto the bill once it hits his desk.

Crude Exports

Less of a change expected here with the party shift. Exports were expected to be a big consideration in 2015 regardless of party control. Republican Lisa Murkowski and Democrat Mary Landreiu were both expected to move the issue forward. As of this morning Landreiu is locked in a runoff contest, but Murkowski will be stepping up as Chair of Senate Energy and Natural Resources Comittee next year, and has vowed to push the issue on LNG and Crude exports.

Other Issues

Other issues that may come to the fore include addressing the EPA's proposed regulations on pollution generated from coal fired plants. This is probably too late to be relevant in the New England region, where we are seeing skyrocketing electricity costs and Natural Gas supply issues as a result of retiring older plants.

It will be interesting to see if other items come to the floor as the legislative session advances. Perhaps RFS issues, blendwall issues, or indications of a reversal of the prohibition of fracking on Federal Land. We shall see.

In June, the White House released a 15 page report on the status of its' Climate Change Initiative. In 2009, Obama stated the goal would be to drop US carbon emissions to 17% below 2005 levels - an ambitious figure that the country is not only on track to meet, but should easily surpass.. In fact, in 2012, US carbon emissions hit a 20 year low. Why?

Is it all the wind power? Solar? Emissions mandates? Not even close. Its thanks to fracking.Yes, fracking.

In fact, according to information from a meeting of the Council of Europe in Strasburg in June - fracking in the US alone has reduced carbon emissions by significantly more than the entire world's wind and solar projects - COMBINED. (You can read the whole article on that here: Oil and Gas Online)

Even the Intergovernmental Panel on Climate Change's most recent report in April (as quoted in the daily caller) states that “A key development since AR4 is the rapid deployment of hydraulic‐fracturing and horizontal‐drilling technologies, which has increased and diversified the gas supply and allowed for a more extensive switching of power and heat production from coal to gas … this is an important reason for a reduction of GHG emissions in the United States"

So basically what is happening is the abundance of natural gas we now have domestically, plus its very attractive price level, is causing massive levels of companies and consumers to switch to natural gas. This in turn is causing a natural phase out of coal and other more carbon intensive methods of power generation. Nat Gas emits 45% less carbon per unit than coal, so naturally, carbon emissions drop drastically with a large population shift to a cleaner burning fuel.